The proposed essay highlights the case wherein two parties fought for the claim that aroused because of a very small misunderstanding. The first party was owner itself, and the second party was Charterer. A huge loss was suffered by both the parties, which could have been resolved if there was a proper communication between both the parties. Both the parties blamed each other for the loss that occurred. In this case, rules and regulation formulated by both the parties were neglected in every situation. From the end of owner the contract and the situation was a valid one and form the end of Charterer, the situation was completely void. Because of a small negligence, all the goods and product of the charterers were damaged, for which he claimed owner to return the amount of loss that was suffered by him. Later it was identified that in this case the fault was made by the charterer’s bank, which was in Singapore.
On 1st January, 2012 a contract was signed between two parties, where the owner promised charters to provide his ship, which was named Ocean Ship Vessel, to carry on trade of goods and service by the charters for 12 month and 15 and more day depending on the option of the charter. The contract formulated was based on the terms and conditions that are maintained in the clause (10) and clause (11) of charter party. Clause (10) says that there is a specified and a fixed amount that is to be paid on an equal interval of time by the party who is making the payment. On the other hand, clause (11) of charter specifies that this amount specified in clause (10) must be paid in seven equal installments. The delivery and redelivery of the goods loaded in the ship were to be safely unloaded on a safe port named Antwerp-Hamburg range. According to the Charter part clause (10) it was decided that an installment of US $17,500 per day must be paid by the charter party. It was decided that the entire hire was to be deposited every day in the account of the owner. The bank was Mercantile & Commercial Bank.
On 29th April, 2012, a vessel was to be delivered to the charter at 21.30 hrs GMT. On 28th April, 2012 an installment of US $17,500 was to be made by the charter for the shipment. On 27th April the charter called up his bank in Singapore and asked him to deposit the amount in the account of Owner’s bank. The bank did the same. Unfortunately, the amount to be deposited in the owner’s bank was deposited in the account of the third party. As no payment was received by the owner till the end of 28th April, 2012, the owner called up to charter informing that no payment was received by him.
Because of such a big confusion created by the bank, still no amount was paid to the third party. On 4th May, 2012, as soon as the owner completed with the cargo, he withdraw the vessel and unloaded the good of charter somewhere before the final destination. Hence, the charter claimed the owner for the loss suffered by the charter as all the unloaded goods were damaged. The charter said that the action taken by the owner was wrongful for with owner is liable for the sustainable damage claim.
As per the understanding regarding the case, both the parties were right on their part. It was the negligence of both the parties that such a huge loss occurred and both were continuously blaming each other. Whatever the situation was, before unloading goods of charter, the owner must have asked charter for such a delay hire, and in the same manner, the charter must have explained the problem that was faced by him. At the end, both the parties suffered and now according to the claim, the owner was made liable to pay the claimed amount to the charter. According to hire act 27, Clause (2), (184.108.40.206), there is a time period of 10 which must have been provided to the charter by the owner. However, due to the lack of legal knowledge, the owner made a big mistake. He unloaded the property of charter and provided that ship to some other party1.
There are two methods that are applicable in this reference. The first one if Marine act and the second one the insurance claimed by the charterer. As in this case, the charterer has claimed owner to pay the full amount for the property that has been destroyed, according to the margin law, he can get an exemption on the total amount that is to be paid2.
The second option that can help the owner to get rid of such a big disaster is to convince the charterer to take back the claim and take help of insurance company. Whenever any loss occurs, and requires repair or replacement of items as a whole or partly for any physical damage incurred,
Moving forward, there is one more law that can be applicable in this situation. The requirement is mentioned in the abbreviation Clause, cl.45. This is gain divided into some subsections, subsection (a) and sub section (b). Clause 45 says that whenever any loss of property occur specially related to the ocean loaded and unloaded material, then the amount of loss to be paid will be decided by any of the one mentioned in Arbitration Clause, cl.45, part (a) and (b). In clause 45 (a), it is mentioned that whenever there is any misconduct caused from the end of both the parties than a committee is setup who is accountable to decided for the amount of exemption that will be paid to both the parties.
As the European Law was mainly focusing on the welfare of the victim party, there are certain changes made in this law10. The new low formulated is much more strict then the previous one and mainly focuses on the safety of the purchaser. However, in this situation the new the new regulation formed can go against the Charterers as in this case the initiative for the fault became for the charterers’ side that did not paid the amount on time.
According to case two, a contract was signed between owner and charterer On 1st January, 2012, where the owner promised to provide his ship, named Ocean Ship Vessel, to carry on trade of goods and service by the charters for 12 month and 15 and more day depending on the charterer option.
The due date for the hire in this case was 28th April, 2012. There was no notice send by the owner on 27th for the payment to be made. Instead of sending a notice earlier, under clause, 18 (a), a notice was send by the owner to the charter on 30th April, 2012, indicating to pay the hire latest by 4th May, 2012. Still there was no payment made by the charterer till 4th of May, 2012. On 5th May, 2012, as not payment was received from the charterer, the owner first checked his bank account to check for the finance; finding that there was no payment made, same day at 12:00 hours he send a message to the charterer indicating that as there was no outstanding payment received, he has immediately withdrawn the vessel from the Charterers’ service and has reserved his own rights that claims the discharge cost for the remainder of cargo. Same day, just 20 minutes later the message was send, the owner received a call form his own bank where the banker apologize for the inconvenience that was caused to him.
The banker further stated that the entire amount of hire was transferred in the bank on Friday morning at 2 AM; however, as the amount was not fully references, the bank did not recognize the remittance immediately. Even after receiving that call and knowing about the fact, the owner proceeding with the vessel withdrawal. In addition to that, when the charterer asked back for the refund of hired amount, the owner refused. The owner stated that he will keep this amount as a security to retain the cost that us been incurred in completing the cargo discharge and also there was a labour and operational cost incurred for the incarceration of the ship.
By the study of this entire case I can conclude that the owner to an extinct was correct on his path. Most of the steps taken by him were correct; however, there were some points were the owner was wrong on his path. My advice to the owner is that he must take help of some regulatory act which can help him to get rid of the charge that has been claimed on him.
There are many points that can prove that the owner was right and can save him from the claim. The owner must really be appreciated for showing a patience of 7 day. There are many other ways that might have been adopted by the owner to get back the hire. Even after knowing that the payment was not received, the owner allowed the property of charterer to get loaded on the vessel. A sufficient time period was provided by the owner to the charterer to make the payment time. Further, in this case, the charterer on 2nd May got aware of the fact that the payment is not transferred to the owner’s bank. If he wanted he could have immediately made the payment. The charterer waited for the error to get rectified and then make the payment. Instead, the charterer in a very polite manner could have asked the owner for some time to make the payment.
Also, according to clause 11 (a) of there will be reduced amount that will be required to be pay by the owner. Id there will be any liability on the owners ends, the amount on the liability will be reduced which will contribute to the total damage that was caused. On the other hand, Clause 11 (b), say that the owner will be liable for the damage as the damage was made in his negligence and such can be taken to the custody1. More of, it was informed to the charter in advance that the vessel is withdrawn and if any wrongful happen, the he is not responsible for the delinquency.
A act named Doctrine of Frustration Act, Indicated that there are situation when a person gets frustrated by certain act and under such circumstance and take action that may cause an obligation to the other party. The law states that a contract between two parties can any time be discharge on the ground of frustration in case if there is something after the formation the formation of the contract which can hinder and render the contract physically or commercially to fulfil obligations to transform and due to the frustration performs a radically different obligation that were undertaken at the time of contract1.
There is an act that that can help the owner and support him in the above situation. The act is known as Right to information act. The Right to Information Act provides an effective and efficient access to information for the citizens1. The information is under the control of the public powers. In working places this act promotes transparency and accountability for every public authority. On behalf of this act, one more suggestion can be provided to the owner. Under the right to information act, the owner can claim back charterer that the right to information did not existed in this case2.
A final advice to the owner is that he can take help of the EU Competition Law under which he will only have to pay for the reparation charges1. By this, instead of paying for the entire amount, the owner will only have for the damage charges. In this case there was negligence from both the parties in the contract; hence he is not answerable for the entire damage amount.
Britian, G. and Thomas, H.W., 1980. The Sale of Goods Act 1979: With Annotations. Taylor & Francis.
Goulielmos, M.A., 2001. Maritime safety: facts and proposals for the European OPA. Disaster Prevention and Management. 10(4). pp.278 – 285.
Cohen, N. and Kendrick. M.E., 2005. Comparative Remedies For Breach Of Contract. Hart Publishing.
Fine, R.C. and Castagnera, O.J., 200. Should there be corporate concern: Examining American university intellectual property policies. Journal of Intellectual Capital. 4(1). pp.49 – 60.
Goldsmith, R.B. and Lawson, B.T., 1998. Choice of law clauses in customer agreements: NASD conduct rule. Journal of Financial Regulation and Compliance. 6(3). pp.224 – 230.
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